ECON2300
Selected Answers for Practice Set 2
1. Draw the preferences of a consumer who cares only about two goods (1 and 2), prefers more of each
good to less, and she has diminishing marginal rate of substitution. Use the graph to show that her
preferenc

ECON2300, V. Bardis
Practice Set 5
1. For a consumer with utility function U (x1 , x2 ) = x1 x2 , income m and facing prices p1 , p2 :
2
(a) nd the demand functions for good 1 and good 2 and the indirect utility function
Use the result to carry out the fo

ECON2300, V. Bardis
Practice Set 6
1. For each of the following utility functions nd the Market (or Actual or Marshallian) demands for
good 1 and good 2 and the Indirect Utility Function. (If you have done assignment 4, you should
have the answers to thes

Practice Set 1 Selected Answers
(Bold indicates sufficient for full marks.)
1.
FALSE. (Most often statements that include . must be . turn out to be false.)
Argument:
An increase in the price ratio, P1/P2, means that good 1 becomes more expensive relative

*
= CS at P^o - CS at P' =
= (A+B+C)- (C) = A+B
* Note: Do not be alarmed about the integrals here. The point is to show that in the
case of a linear demand function, we can calculate CS and the Change in CS using
area of triangle instead of integrals.

ECON2300, V. Bardis
Practice Set 3
For each of the utility functions given in each exersice below:
(i)
(ii)
Find the consumers Market or Marshallian demand function for each good, the maximum
utility (or indirect utility) function, and the marginal utilit

ECON2300, V. Bardis
Practice Set 1
1 Determine whether the following statement is True, False or Uncertain:
If the price ratio, p1 /p2 , increases, then it must be true that the consumer can aord fewer consumption bundles than before.
2 On the same graph

2014
1. To record cost of construction:
Construction in Process
Materials, Cash, Payables
2. To record progress billings:
Accounts Receivable
Billings on Construction in Process
3. To record collections:
Cash
Accounts Receivable
4. To recognize revenue an

ECON2300, V. Bardis
Practice Set 2
1. Draw the preferences of a consumer who cares only about two goods (1 and 2), prefers
more of each good to less, and she has diminishing marginal rate of substitution. Use the
graph to show that her preferences are str

E4-4
Income from continuing operations before income tax
Income tax
Income from continuing operations
Discontinued operations (Note XX)
Income from operations of the discontinued
Blue Division, less applicable
income tax of $1,800
Loss from impairment of